The first law signed by Mr Humala [Peru’s President] required the government to consult with local communities before approving extractive projects. This was followed by measures to increase the total tax-take from mining by about $1 billion a year. His popularity soared. A year later, conflicts are rising again: the ombudsman’s office reports 149 disputes involving extractive industries. The government has declared a state of emergency in one area, and sent troops to another. Eight protesters have been killed by the police since March. Mr Humala’s approval rating is down to 45%, according to Ipsos-Apoyo, a polling firm.
The fiercest fight involves Minas Conga, a $4.8 billion gold and copper project in Cajamarca, in the north, by Newmont, an American firm, and Peru’s Buenaventura. This would have turned several Andean lakes into reservoirs or tailings ponds. That alarmed peasant communities. After protests flared, Mr Humala promised to invest $2 billion in Cajamarca and ordered a fresh environmental study. This recommended changes, to save two lakes. But Gregorio Santos, Cajamarca’s regional president, has vowed to stop Conga. He may get his way. Newmont has scaled back its investment in Peru this year, and said that Conga will no longer start in 2014, as planned, but perhaps in 2017. Three other projects in the same area, with total investment of $5 billion, are also in jeopardy.
Last month two people were killed and buildings set alight in Espinar, in the southern highlands, in a protest against Xstrata, an Anglo-Swiss company that owns a copper mine at Tintaya and is building another nearby. The government arrested the mayor, who led the protests. He wants Xstrata to raise its contribution to a social fund from 3% to 30% of pre-tax profits. When that gained little support in other parts of the country, he began to complain of pollution. But a dozen studies since 2005 have found the presence of heavy metals in water to be within legal limits.
Mining investment, forecast at over $50 billion in the next five years, is starting to fall. A score of giant projects account for over 85% of the planned spending. Of these, 11 face social conflicts, according to a note by Canada’s Scotiabank. Five legislators have left Mr Humala’s party over the protests, weakening the government in Congress. The president seems to have few ideas as to how to prevent disputes, or how to negotiate when they do break out. Having spent years posing as the protesters’ champion, Mr Humala is now reaping the bitter harvest of dashed expectations
Mining in Peru: Dashed expectations, Economist,June 23, 2012, at 42